Kenmare Resources (LON:KMR) KENMARE RESOURCES PLC

HALF YEARLY FINANCIAL REPORT
FOR THE PERIOD ENDED 30 JUNE 2008



INTERIM MANAGEMENT REPORT


Group activities

The principal activity of Kenmare Resources plc is the operation and
expansion of the Moma Titanium Minerals Mine in Mozambique. The mine
contains reserves of valuable heavy minerals, which include the
titanium minerals ilmenite and rutile, as well as the high-value
zirconium silicate mineral, zircon.

Ore containing these minerals is mined using dredges and concentrated
in a floating wet concentrator plant (WCP), which pumps a heavy
mineral concentrate (HMC) to a mineral separation plant (MSP), where
it is separated into final products for export. Sand and clay
tailings from the WCP and MSP are permanently disposed in the
mined-out dredge path, which will be progressively rehabilitated with
the objective of returning the land to conditions capable of
supporting uses that are equal to or better than prior land use.

Operations

Commissioning delays and equipment shortcomings at the Moma Mine have
resulted in lower than planned production and income levels. We have
now dealt with the reasons for these delays and anticipate
significant increases in Mine output. Today we are announcing a
successful placing which raised US$30 million. These funds will
facilitate the ongoing ramp-up of production to target levels.

As previously reported, a number of items of equipment supplied by
the turnkey contractor were not fit for purpose and had to be
replaced under the defects provision. The contractor has now replaced
both the dredge pump motors and the vibrating screens in the MSP.
However, waiting for these replacements has considerably delayed our
ramp-up programme.

Both prior to and following installation of the replacement dredge
pump motors, additional technical resources were provided to assist
mine management in the key task of increasing dredge production to
design levels. Close co-operation among mine management, the
contractor, the dredge manufacturer, and other dredging experts is
contributing to the increase in the dredge performance. Kenmare
senior management will monitor this process closely during the course
of the remaining production ramp-up.

As production of HMC increased, so has the feed rate to the MSP.
Additional technical resources have also been provided to help
resolve remaining issues that have been identified in the MSP, in
particular with the rutile and zircon circuit, and to accelerate any
rectification works that may be required to increase output of final
products as the mine production ramps-up.

As a consequence of the above, during the 6 months ended 30 June
2008, production was restricted to 111,000 tonnes of ilmenite. Recent
ilmenite production was as follows: April 12,000 tonnes, May 20,000
tonnes, June 31,000 tonnes and July 28,000 tonnes. August production
was lower due to a 7 day shut down for remedial works and due to a
build-up of fine clay particles (slimes) in the mining pond. The
remedial works have been successfully completed and the slimes are
now being pumped out of the pond on an ongoing basis. Co-products
rutile and zircon were also restricted during the period. A monthly
production rate of approximately 66,000 tonnes of ilmenite, plus
co-products, rutile and zircon, by the end of this year remains our
objective. The Board remains determined to take all steps necessary
to achieve this target. The contractor, who is responsible for the
achievement of specified performance levels in accordance with the
construction contract, is also co-operating with Kenmare to enable
ramp-up to design levels.

The only part of the processing plant that has not been taken over
from the construction contractor is a roaster plant, the purpose of
which is to upgrade one ilmenite product. The roaster is due to be
completed later this year. However, market demand remains strong and
we are supplying unroasted ilmenite to customers until roasted
ilmenite becomes available.

In addition to the ramp-up, operating and expansion activities during
the period under review, management at Moma dealt very effectively
with the consequences of a cyclone that passed over the mine in early
March. Remediation works are largely completed, with the exception of
some repairs to the accommodation village that are due to be finished
in September. Our insurance policy has responded to this situation
and a claim application is being processed.

The market for all our products continues to strengthen and demand
from our customers has increased. Demand for titanium feedstocks is
predicted to continue to grow steadily by at least 3% per annum.
Supply disruptions in a number of countries have exacerbated the
current supply shortage, resulting in higher prices. These higher
prices will more than offset recent operating cost increases.

The Moma Titanium Minerals deposits contains resources which have a
life, at current target production levels, of over 100 years. Given
the favourable market conditions, there is a very strong case for
expansion. A dedicated team is developing a feasibility study for the
expansion of our output by approximately 50% to 1.2 million tonnes of
ilmenite plus co-products zircon and rutile. This study will be
presented to the Board later this year, at which time expansion
financing plans can be finalized.

Kenmare Moma Development Association

The Kenmare Moma Development Association (KMAD) supports and
contributes to the development of the communities in the area
surrounding the mine through a variety of capacity building,
infrastructure and cultural projects. KMAD has successfully completed
its third year of work under an initial development plan and is now
preparing an updated strategy for the next five years, as well as a
detailed implementation plan for the next three years. Kenmare
remains committed to supporting KMAD, and appreciates all support
given by employees and others who have contributed to it.

Results for the six months ended 30 June 2008

The loss for the period of US$8.1 million (2007: US$0.1 million)
arises primarily from foreign exchange losses on Euro-denominated
loans and corporate operating costs, partially offset by deposit
interest earned and gain on sale of investments. The Euro strengthen
against the US Dollar during the first six months of 2008, resulting
in a foreign exchange loss of US$8.5 million (2007: US$2.1 million)
on Euro-denominated long-term senior and subordinated project debt.

During 2008, Kenmare continued the process of increasing production
towards the target levels planned by management. Senior management
will keep under review the impact of the Group's policy of
capitalising costs in the coming months. Operating costs associated
with ramp-up of production, net of revenues generated from production
sales, were capitalised as deferred development expenditure. Loan
interest of US$13 million, net of interest earned on deposit of loan
disbursements, and construction contract delay damages were also
capitalised as deferred development expenditure. In total, deferred
development expenditure increased by US$31 million for the period.
Additions to property, plant and equipment amounted to US$1.6
million. Expenditure, net of sales receipts, was funded from bank
loans and cash on hand.

The Group total cash and cash equivalents at 30 June 2008 amounted to
US$47.7 million (2007: US$68.4 million), of which US$43.0 million was
in restricted banks accounts over which project lenders retain
security, including US$15 million that can currently only be used
with the consent of project lenders. The Group total debt at 30 June
2008 amounted to US$352.4 million (2007: US$309.3 million). During
the period, payments of senior loan interest and principal totalled
US$17 million (2007: US$5.5 million), and disbursement of additional
standby subordinated loans amounted to US$22 million.

Principal risks and uncertainties

The Group's business may be affected by risks similar to those faced
by many companies in the mining industry. These include geological,
political, operational and environmental risks and changes in the
macroeconomic environment. The main risks applicable to the Moma mine
are set out below:

Commercial risks
The main use for ilmenite and rutile is as a feedstock for titanium
dioxide pigment, primarily used in the manufacture of paint, plastics
and fabrics. Zircon is primarily used in the ceramics industry.
Consumption of titanium dioxide pigment and ceramics is closely
correlated with global economic activity and demand can vary over
time. There is a risk that changes in the macroeconomic environment,
and changes in the mining industry, may result in increases in
operating costs. Senior management monitor closely customer sales
contracts and manage the mine's cost base to ensure it remains
competitive.

Operational risks
Achieving target design production levels is dependent upon
completion of remaining construction activities and the ability of
mine management to continue to increase production levels. Senior
management will continue to carefully manage the construction
contract and allocate the required resources to enable the mine
management to overcome hurdles that may present themselves during the
course of the remaining ramp-up period.

Financing risks
Achieving successful delivery of the remaining project works,
production ramp-up and the planned expansion depends on the
availability of sufficient finance. The Board carefully monitors
senior management's financing activities both with respect to
existing loans and prospective sources of funds. Project loan
documentation requires the maintenance of a Contingency Reserve
Account. The amount of funds required to be on deposit in this bank
account is determined by a calculation involving projected capital
and operating costs, revenues, interest and principal payments and
reserve account contributions required to achieve completion under
the project loan documentation. Absent a waiver, failure to timely
make a required deposit to the Contingency Reserve Account would give
rise to an event of default under the Senior and Subordinated Loan
documentation. A continuing failure to make a required deposit to
the Contingency Reserve Account would, with notice and the passage of
time, result in an event of default which, among other things, would
give project lenders the right to exercise their security interests,
which encompass substantially all of the assets of the Moma Project
as well as the shares in the project companies. Senior management is
maintaining a close dialogue with project lenders and, taking account
of existing financial resources available to the Group, will ensure
that plans are in place to maintain sufficient funding to achieve
target production levels.

Financial risks
The development of the Mine has been financed in part by Euro and US
Dollar denominated senior and subordinated loans. The Euro
denominated loans expose the Group to currency fluctuations. The
borrowings issued at floating rates expose the Group to cash flow
interest risk. Borrowings issued at fixed rates expose the Group to
fair value interest rate risk. Senior management regularly monitors
and reports to the Board on these currency and interest rate risks.
The Board has determined that the Group's current policy of not
entering into derivative financial instruments to manage such risks
continues to be appropriate in light of the mix of fixed and floating
rate exposures. The Group's policy with respect to liquidity and cash
flow risk is to aim to ensure continuity of funding mainly through
the issue of shares, bank loans and cash generated from operations.

Environmental risks
Kenmare is committed to managing its operations in accordance with
applicable guidelines issued by the World Bank and the African
Development Bank, in addition to the environmental laws and standards
in force in Mozambique. Kenmare's Environmental Management Plan sets
out the monitoring activities, management and training programs,
reporting activities, auditing and mitigation measures that are
required in order to identify and reduce any negative impacts of its
operations and to comply with applicable environmental laws and
guidelines. Senior management regularly reports to the Board on the
status of compliance with the Group's environmental obligations, and
aims to ensure that this plan is properly implemented and maintained.

Health and safety risks
Kenmare is committed to conduct its business in a manner that
minimises the exposure of its employees, contractors and the general
public to the health and safety risks of its operations to. Kenmare
operations personnel worked 734,443 hours in the six months to 30
June 2008, with three lost-time injuries. The safety performance by
the project contractor and sub-contractors was also excellent, with
over 7.4 million consecutive lost-time injury-free man-hours worked
to the period end. Malaria is a key risk at Moma and Kenmare
continues to develop and implement programs to minimise its impact on
all personnel at Moma. Kenmare will also continue to ensure that
appropriate health and safety standards are maintained in all Group
activities.

Outlook

The key tasks for the Group in the coming months are the successful
completion of the remaining project works, increasing production to
target levels, delivery of a feasibility study for a mine expansion,
and development of plans to fund the expansion. Kenmare will continue
to monitor Group funding requirements and obligations under the
financing documentation, and will ensure that plans are in place to
maintain sufficient funding to achieve target production levels.

Related party transactions

There were no related party transactions in the half year that
materially affected the financial position or performance of the
Group in the period. In addition, there were no changes in the
related party transactions set forth in the last annual report that
have had or could have a material effect on the financial position or
performance of the Group in the first six months.

Forward-looking statements

This report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the time of their approval of
this report and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.

By order of the Board,


Charles Carvill
Chairman
29 August 2008



RESPONSIBILITY STATEMENT


The Directors are responsible for preparation of the Half Yearly
Financial Report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 and with IAS 34, Interim Financial
Reporting as adopted by the European Union.

The Directors confirm that, to the best of their knowledge:

- The condensed consolidated financial statements for the half year
ended 30 June 2008 have been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU;

- The Interim Management Report includes a fair review of the
information required by Regulation 8(2) of the Transparency
(Directive 2004/109/EC) Regulations 2007, being an indication of
important events that have occurred during the first six months of
the financial year and their impact on the condensed financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and

- The Interim Management Report includes a fair review of the
information required by Regulation 8(3) of the Transparency
(Directive 2004/109/EC) Regulations 2007, being related party
transactions that have taken place in the first six months of the
current financial year and that materially affected the financial
position or performance of the entity during that period; and any
changes in the related party transactions described in the last
annual report that could do so.


By order of the Board,


Charles Carvill
Chairman
29 August 2008



INDEPENDENT REVIEW REPORT
TO THE MEMBERS OF KENMARE RESOURCES PLC


Introduction

We have been engaged by the Company to review the group condensed set
of financial statements in the Half Yearly Financial Report for the
six months ended 30 June 2008, which comprises the Group Condensed
Income Statement, Group Condensed Balance Sheet, Group Condensed
Cashflow Statement, Group Condensed Statement of Changes in Equity
and related notes 1 to 10. We have read the other information
contained in the Half Yearly Financial Report and considered whether
it contains any apparent misstatements or material inconsistencies
with the information in the group condensed set of financial
statements.

This report is made solely to the Company in accordance with
International Standard on Review Engagements 2410 issued by the
Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to
them in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review work,
for this report, or for the conclusions we have formed.

Directors' Responsibilities

The Half Yearly Financial Report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the Half-Yearly Financial Report in accordance with the
Transparency (Directive 2004/109/EC) Regulations 2007.

As disclosed in note 1, the annual financial statements of the Group
are prepared in accordance with IFRSs as adopted by the European
Union. The group condensed set of financial statements included in
this Half Yearly Financial Report has been prepared in accordance
with International Accounting Standard 34, ''Interim Financial
Reporting,'' as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the
group condensed set of financial statements in the Half Yearly
Financial Report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, ''Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity'' issued by the Auditing Practices Board for use in Ireland. A
review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us
to believe that the group condensed set of financial statements in
the Half Yearly Financial Report for the six months ended 30 June
2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 (IAS 34 - Interim Financial
Reporting) as adopted by the European Union and the Transparency
(Directive 2004/109/EC) Regulations 2007.

Property, Plant and Equipment and Deferred Development Expenditure

Without modifying our conclusion, we raise your attention to notes 4
and 5 regarding the disclosures made in the interim group condensed
financial statements concerning the recoverability of Property, Plant
and Equipment, and Deferred Development Expenditure. The realisation
of Property, Plant and Equipment of US$306,759,000 and Deferred
Development Expenditure of US$207,947,000 included in the Group
Condensed Balance Sheet, is dependent on the successful development
and operation of the mine, which in turn is dependant on a successful
ramp up of operations and the continued availability of adequate
funding for the mine.

Deloitte & Touche
Chartered Accountants
Deloitte & Touche House
Earlsfort Terrace
Dublin 2

29 August 2008




KENMARE RESOURCES PLC
GROUP CONDENSED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008




Unaudited Unaudited Audited
6 Months 6 Months 12 Months
30-Jun 30-Jun 31-Dec
2008 2007 2007
Notes US$'000 US$'000 US$'000

Revenue 2 - - -

Operating expenses (8,809) (1,702) (12,557)

Finance income 720 1,606 2,925

Loss before tax (8,089) (96) (9,632)

Income tax expense -
- -

Loss for the (8,089) (96) (9,632)
period/year

Attributable to (8,089) (96) (9,632)
equity holders

Cent per Cent per share Cent per share
share
Loss per share: basic 3 (1.09c) (0.01c) (1.40c)

Loss per share: 3 (1.09c) (0.01c) (1.40c)
diluted






The accompanying notes form part of the condensed financial
statements


KENMARE RESOURCES PLC
GROUP CONDENSED BALANCE SHEET
AS AT 30 JUNE 2008



Unaudited Unaudited Audited
30-Jun 30-Jun 31-Dec
2008 2007 2007
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 4 306,759 293,657 310,595
Deferred development expenditure 5 207,947 152,396 176,365
514,706 446,053 486,960

Current assets
Inventories 6,497 403 5,631
Trade and other receivables 4,755 537 4,842
Cash and cash equivalents 47,727 68,457 56,203
58,979 69,397 66,676

Total assets 573,685 515,450 553,636

Equity
Capital and reserves attributable
to the Company's equity holders
Called up share capital 6 60,951 56,261 60,742
Share premium 6 122,885 109,285 121,501
Capital conversion reserve fund 754 754 754
Retained earnings (39,225) (21,600) (31,136)
Other reserves 42,471 41,040 41,562
Total equity 187,836 185,740 193,423

Liabilities
Non-current liabilities
Bank loans 7 325,677 293,798 299,570
Obligations under finance lease 2,286 - 2,292
Mine closure provision 2,580 2,505 2,505
Mine rehabilitation provision 1,419 - -
331,962 296,303 304,367

Current liabilities
Bank loans 7 26,807 15,579 26,273
Trade and other payables 27,080 17,828 29,573
53,887 33,407 55,846

Total liabilities 385,849 329,710 360,213

Total equity and liabilities 573,685 515,450 553,636






The accompanying notes form part of the condensed financial
statements


KENMARE RESOURCES PLC
GROUP CONDENSED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008



Unaudited Unaudited Audited
6 Months 6 Months 12 Months
30-Jun 30-Jun 31-Dec
2008 2007 2007
US$'000 US$'000 US$'000

Operating activities
Loss for the period/year (8,089) (96) (9,632)
Adjustment for:
Foreign exchange movement (37) 705 1,680
Increase in long term provisions - 140 140
Share-based payment expense 27 69 -
Operating cash flow (8,099) 818 (7,812)

Increase in inventories (866) (403) (5,631)
Decrease/(increase) in trade and 87 273 (4,032)
other receivables
Decrease in trade and other (2,539) (19,691) (7,896)
payables
Cash generated by operations (11,417) (19,003) (25,371)

Interest paid (7,200) (5,486) (12,249)
Net cash from operating activities (18,617) (24,489) (37,620)

Investing activities
Addition to deferred development (16,817) (5,535) (37,896)
expenditure
Addition to property, plant and (1,354) (27,939) (29,131)
equipment
Net cash used in investing (18,171) (33,474) (67,027)
activities

Financing activities
Proceeds from the issue of shares 1,593 1,094 3,542
Proceeds from shares to be issued - - 14,249
Repayment of borrowings (17,312) (4,424) (4,424)
Increase in borrowings 43,954 43,225 59,691
Increase in obligations under 40 - 2,242
finance lease
Net cash from financing activities 28,275 39,895 75,300

Net decrease in cash and cash (8,513) (18,068) (29,347)
equivalents

Cash and cash equivalents at 56,203 87,230 87,230
beginning of period/year
Effect of exchange rate changes on 37 (705) (1,680)
cash and cash equivalents

Cash and cash equivalents at end 47,727 68,457 56,203
of period/year





The accompanying notes form part of the condensed financial
statements

KENMARE RESOURCES PLC
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2008





Share Share Capital Retained Other Total
Capital Premium Conversion Earnings Reserves
Reserve
Fund
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000



Balance at 55,940 108,512 754 (21,504) 40,347 184,049
31 December
2006

Loss for the - - - (96) - (96)
period
Share-based - - - - 693 693
payment
Issue of 321 773 - 1,094
share - -
capital


Balance at 56,261 109,285 754 (21,600) 41,040 185,740
30 June 2007
Loss for the - - - (9,536) - (9,536)
period
Share-based - - - - 522 522
payment
Issue of 4,481 - 16,697
share 12,216 - -
capital

Balance at
31 December 60,742 121,501 754 (31,136) 41,562 193,423
2007

Loss for the - - - (8,089) - (8,089)
period
Share based - - - - 909 909
payment
Issue of 209 - 1,593
share 1,384 - -
capital

Balance at
30 June 2008 60,951 122,885 754 (39,225) 42,471 187,836





The accompanying notes form part of the condensed financial
statements

KENMARE RESOURCES PLC
NOTES TO THE GROUP CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2008


1. BASIS OF PREPARATION
The Group Condensed Financial Statements for the six months ended 30
June 2008 have been prepared in accordance with the European Union
('EU') Transparency Directive and IAS 34 Interim Financial Reporting
as adopted by the EU.

The accounting policies and methods of computation adopted in the
preparation of the Group Condensed Financial Statements are
consistent with those applied in the Annual Report for the financial
year ended 31 December 2007 and are described in those financial
statements.

The Group did not adopt any new International Financial Reporting
Standards (IFRS) or Interpretations in the period that have a
material impact on the Group Condensed Financial Statements for the
half year.

In the current financial year, the Group has adopted a policy for
mine reclamation provision. The mine reclamation provision represents
the Directors' best estimate of the Group's liability for reclaiming
areas disturbed by mining activities. Reclamation costs are estimated
based on the area disturbed and are recognised on a progressive basis
throughout the life of the mine.

Both the figures for the six months ended 30 June 2008 and the
comparative amounts for the six months ended 30 June 2007 are
unaudited. The Group condensed financial information for the year
ended 31 December 2007 represents an abbreviated version of the
Group's full year financials statements for that year. Those
financial statements contained an unqualified audit report and have
been filed with the Registrar of Companies.
2. SEGMENTAL INFORMATION
Management considers the operation of the Moma Titanium Minerals Mine
in Mozambique as its primary business segment and its geographical
segment. Segmental information is presented as follows:



SEGMENT Unaudited Unaudited Audited
30-Jun-08 30-Jun-07 31-Dec-07
US$'000 US$'000 US$'000
Results
Revenue - - -
Operating expenses
Moma Titanium Minerals Mine (8,955) (2,124) (11,887)
Mozambique Uranium Project (332) 0 (1,455)
Unallocated corporate gains 478 422 785
Total operating expenses (8,809) (1,702) (12,557)
Finance income 720 1,606 2,925
Loss before tax (8,089) (96) (9,632)
Income tax expense - - -
Loss for the period (8,089) (96) (9,632)

Other information
Capital additions 1,579 28,041 50,235

Balance Sheet
Moma Titanium Minerals Mine assets 540,648 449,017 501,027
Corporate assets 33,037 66,433 52,609
Total assets 573,685 515,450 553,636


Moma Titanium Minerals Mine Liabilities 383,700 327,706 357,348
Corporate liabilities 2,149 2,004 2,865
Total Liabilities 385,849 329,710 360,213


3. LOSS PER SHARE
The calculation of the basic and diluted earnings per share
attributable to the ordinary equity holders of the parent is based on
the following data:



Unaudited Unaudited Audited
30-Jun-08 30-Jun-07 31-Dec-07
US$'000 US$'000 US$'000
Loss for the purpose of basic
loss per share:
Loss for the period attributable
to equity holders of the parent 8,089 96 9,632

Unaudited Unaudited Audited
30-Jun -08 30-Jun -07 31-Dec-07
Number of Number of Number of
shares shares Shares

Weighted average number of issued
ordinary shares for the
purposes of basic loss per share 743,225,455 687,557,987 689,587,755

Effect of dilutive potential
ordinary shares
Share options 37,378,258 80,246,728 36,803,258
Warrants 28,777,367 39,388,258 29,261,155
Weighted average number of ordinary shares
for the purpose
of diluted loss per share 809,381,080 807,192,973 755,652,168



The basic loss per share and the diluted loss per share are the same,
as the effect of the outstanding share options and warrants is
anti-dilutive.

4. PROPERTY, PLANT AND EQUIPMENT


Plant Buildings Mobile Fixtures Construction Total
&
& & Equipment Equipment In Progress
Equipment Airstrip
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Cost
Balance at 31 257,502 3,812 6,022 2,535 46,082 315,953
December 2007
Reclassification
from 1,271 - - 1 (1,272) -
Construction in
Progress
Reclassification (897) - - - - (897)
to inventory
Additions during 206 - - 19 1,354 1,579
the period
Balance at 30 258,082 3,812 6,022 2,555 46,164 316,635
June 2008

Accumulated
Depreciation
Balance at 31 2,775 74 2,207 302 - 5,358
December 2007
Charge for the 3,412 95 604 407 - 4,518
periodBalance at 30 6,187 169 2,811 709 - 9,876
June 2008

Carrying Amount
Balance at 31 254,727 3,738 3,815 2,233 46,082 310,595
December 2007

Balance at 30 251,895 3,643 3,211 1,846 46,164 306,759
June 2008



A contract for the engineering, procurement, construction,
commissioning and transfer of facilities for the Moma Titanium
Minerals Mine in Mozambique was entered into on 7 April 2004. The
Contractor is a joint venture formed for this project by subsidiaries
of Multiplex Limited and Bateman B.V. Construction in progress shown
in a separate note in the 2007 Annual Report has been included above.

The contract was amended in December 2006 to provide for among other
things, taking-over the Moma Titanium Minerals Mine works in
sections. At 30 June 2008, the only remaining section to be taken
over was the roaster.

The Group has reclassified consumable spares included in property,
plant and equipment at 31 December 2007 in the amount of US$897,000
into inventory.

Substantially all the property, plant and equipment will be or has
been mortgaged, pledged or otherwise encumbered to secure bank loan
facilities granted, as detailed in Note 7.

The carrying amount of the Group's plant and equipment includes an
amount of US$1,791,000 in respect of assets held under a finance
lease.

The recovery of property, plant and equipment is dependent upon the
successful operation of the Moma Titanium Minerals Mine, which in
turn is dependent on the successful ramp-up of production and
continued availability of adequate funding for the mine. The
Directors are satisfied that property, plant and equipment is worth
not less than the carrying value, and that based on the planned mine
production levels the Moma Titanium Minerals Mine will achieve
positive cash flows.


5. DEFERRED DEVELOPMENT EXPENDITURE



Mozambque Ireland Total
Moma Titanium
Minerals Mine
US$'000 US$'000 US$'000

Cost
Balance at 31 December 2007 176,317 48 176,365
Additions 31,580 2 31,582
Balance at 30 June 2008 207,897 50 207,947




Additions include loan interest capitalised of US$13,295,000
(2007:US$11,564,000) net of deposit interest earned on the temporary
deposit of loan balances and operating costs of US$18,287,000
(2007:US$81,000) net of revenue earned of US$8,954,000 (2007:nil) and
net of delay damages of US$1,560,000 (2007: US$10,343,000).


The recovery of deferred development expenditure of the Moma Titanium
Minerals Mine is dependent upon the successful operation of the mine,
which in turn is dependent on the successful ramp-up of production
and continued availability of adequate funding for the mine. The
Directors are satisfied that deferred expenditure is worth not less
than cost less any amounts written off, and that based on the planned
mine production levels, the Moma Titanium Minerals Mine will achieve
positive cash flows.

The recovery of deferred development expenditure in Ireland is
dependent upon the successful development of the project.


6. SHARE CAPITAL
Share capital as at 30 June 2008 amounted to US$60,951,000 (2007:
US$56,261,000). During the period, 2,325,687 ordinary shares were
issued following the exercise of warrants and options. The issue of
these shares resulted in proceeds of US$1,593,000, of which
US$1,384,000 was credited to the share premium account.

7. BANK LOANS


Unaudited Unaudited Audited
30-Jun-08 30-Jun-07 31-Dec-07
US$'000 US$'000 US$'000

Senior loans 201,723 207,808 210,694
Subordinated loans 150,761 101,569 115,149
352,484 309,377 325,843
The borrowings are repayable as
follows:
Within one year 26,807 15,579 26,273
In the second year 37,043 21,333 28,283
In the third to fifth year 111,128 96,674 101,299
After five years 177,506 175,791 169,988
352,484 309,377 325,843
Less amounts due for settlement within
12 months (26,807) (15,579) (26,273)
Amount due for settlement after 12
months 325,677 293,798 299,570

Analysis of borrowings by currency
Euro 131,987 104,910 119,253
US Dollars 220,497 204,467 206,590
352,484 309,377 325,843


The bank loans have been made to the Mozambique branches of Kenmare
Moma Mining (Mauritius) Limited and
Kenmare Moma Processing (Mauritius) Limited (the Project Companies).
Bank loans are secured by substantially all rights and assets of the
Project Companies, shares in and shareholder loans to the Project
Companies, the Contingency Reserve Account and the Shareholder
Funding Account.

Kenmare Resources plc. (the Company) has guaranteed the bank loans
during the period prior to completion, which must be achieved by 30
June 2009. Completion occurs upon meeting certain tests, including
installation of all required facilities, achieving certain cost and
production benchmarks, fulfilling legal, environmental, social and
permitting requirements, and filling of specified reserve accounts.
Upon completion, the Company's guarantee of the bank loans will
terminate. Subject to extension for force majeure not to exceed 365
days, failure to achieve completion by 30 June 2009 would result in
an event of default under the bank loan documentation which,
following notice, would give lenders the right to accelerate the
loans against the Project Companies, and to commence a two-stage
process allowing the lenders to exercise their security interests in
the shares and assets (including accounts) of the Project Companies
and in the Contingency Reserve Account and the Shareholder Funding
Account.

Loan facilities arranged at fixed interest rates expose the Group to
fair value interest rate risk. Loan facilities arranged at variable
rates expose the Group to cashflow interest risk. The Group's revenue
stream is denominated in US Dollars therefore the Euro-denominated
loans expose the Group to currency risk.

8. SHARE BASED PAYMENTS
The Company has a share option scheme for certain Directors,
employees and consultants. Options are exercisable at a price equal
to the quoted market price of the Company's shares on the date of
grant. The options generally vest over a three to five year period,
in equal annual amounts. If options remain unexercised after a period
of 7 years from the date of grant, the options expire. Option expiry
period may be extended at the decision of the Board of Directors.

During the period the Group recognised a share-based payment expense
of US$27,000 (2007:US$69,000).

9. EVENTS AFTER THE BALANCE SHEET DATE
There have been no material events subsequent to 30 June 2008 which
would be required to be reflected in the Group Condensed Financial
Statements. The Company has entered into an arrangement with its
brokers to raise US$30 million through the placing of shares. The
placing is expected to be completed on 4 September 2008 on admission
of the shares.

10. INFORMATION
The Half-Yearly Financial Report is being sent to registered
shareholders by post or electronically to those who have elected for
electronic shareholder communication.

Copies are also available from the Company's registered office at
Chatham House, Chatham Street, Dublin 2, Ireland. The statement will
also be available on the Company's website at
www.kenmareresources.com

---END OF MESSAGE---

Kenmare Resources

http://www.kenmareresources.com/

ISIN: IE0004879486

Stock Identifier: XLON.KMR


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